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Covestro increases 2021 forecasts due to higher margin

April 14/2021

MOSCOW (MRC) -- German plastics group Covestro AG (formerly Bayer MaterialScience) has raised the outlook for its profit, cash flow and return on capital this year on the back of an improvement in margins at its core operating business, reported Reuters.

Covestro released its revised forecast under stock exchange rules requiring listed companies to update the market when performance diverges from expectations.

Earnings before interest, taxation, depreciation and amortization (EBITDA) are now expected to be between EUR2.2 billion and EUR2.7 billion (USD2.6-USD3.2 billion) in fiscal 2021, up from an earlier forecast of EUR1.7-2.2 billion.

The improved outlook reflects higher product prices and margins, mainly in its main businesses - transparent polycarbonate (PC) plastics as well as chemicals for insulation foams and upholstery foams.

Free operating cash flow was forecast at EUR1.3-1.8 billion, up from an earlier view of EUR900 million to EUR1.4 billion, while return on capital employed is now seen at 12%-17% compared to 7%-12% previously.

The company reported preliminary first-quarter EBITDA at EUR740 million and forecast EBITDA in the second quarter at EUR730-870 million.

It will report full first-quarter results on April 28.

As MRC informed previously, earlier this month, DSM completed the sale of the resins & functional materials businesses to Covestro for EUR1.6 billion (USD1.9 billion), including EUR1.4 billion in cash.

We remind that Covestro closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding exports from Belarus) totalled 8,100 tonnes in January 2021, up by 20% year on year (6,800 tonnes a year earlier).

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2020 sales of EUR 10.7 billion, Covestro has 33 production sites worldwide and employs approximately 16,500 people (calculated as full-time equivalents).
Author:Margaret Volkova
Tags:Europe, PC, sheet extrusion, petrochemistry, adhesives, thermal protection, Bayer, Covestro, DSM, Russia.
Category:General News
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